Türkiye’s planned emissions-trading system is introducing a new layer of carbon regulation for domestic producers supplying European markets. Its pilot arrangements, issued at the end of September and publicised in early October 2026, establish procedures covering sectoral participation, emissions benchmarks, free allocation and monitoring, with implications for exporters of steel, cement, aluminium and fertilisers.
The pilot covers the 2026 and 2027 system years, but its first year is structured primarily around emissions reporting rather than an immediate obligation to pay for carbon allowances. This distinction will shape how Turkish manufacturers communicate their carbon costs to European customers and whether payments under the future domestic market can be recognised under the EU Carbon Border Adjustment Mechanism.
Reporting obligations and CBAM carbon-price recognition
The introduction of a national ETS can provide a framework for recording installation-level emissions and creating domestic incentives for industrial decarbonisation. However, a potential deduction under EU CBAM depends on a qualifying carbon price that has actually been paid and adequately documented.
The distribution of free allowances does not, on its own, count as a carbon payment. Even after Türkiye’s market becomes operational, differences in sector coverage, emissions verification and compensation arrangements could influence the amount of domestic carbon costs eligible for recognition under the EU mechanism.
For Turkish steelmakers and other industrial groups, this creates a need to connect national emissions reporting with the product-level calculations required by CBAM. Domestic ETS monitoring may cover emissions at individual installations, while the EU mechanism requires embedded emissions to be attributed to specific imported goods and their precursors.
A steel producer operating several furnaces or an aluminium manufacturer sourcing intermediate materials from multiple facilities cannot rely on a single national compliance document to answer all product-level emissions questions from EU importers.
Installation data becomes central to export compliance
The pilot’s monitoring, reporting and verification requirements could help manufacturers develop more complete records of fuel consumption, material inputs, process emissions and production output. These inventories can provide a stronger basis for external verification and for calculating emissions associated with individual products.
Investment in metering equipment, digital registers and process-control systems could also help companies supply verified actual emissions data to European customers. This is relevant where exporters would otherwise have to rely on default values that may be less favourable for their products.
The reporting-only structure for 2026 also has direct implications for commercial disclosures. Turkish exporters can state that their installations fall within the country’s ETS pilot and have started emissions reporting. They cannot, on that basis alone, claim to have paid a tradable allowance price on production during 2026.
EU buyers will therefore need to distinguish between ETS registration, allowance allocation and evidence of actual carbon payments. For commercial tenders, exporters could separately disclose three categories of information: verified direct installation emissions, emissions attributed to the products covered by CBAM, and carbon charges actually paid after applicable relief.
Such disclosures would give buyers a clearer basis for comparing Turkish supplies with products from Serbia, the EU and Asian markets. The pilot can improve the transparency of emissions data, but the potential financial benefit under CBAM will depend on the subsequent operation of the Turkish market and the EU rules governing recognition of domestic carbon costs.
Domestic allowance prices and residual CBAM exposure
The future relationship between Turkish and EU carbon prices will be another factor for exporters. If the Turkish ETS establishes an effective allowance cost significantly below EU ETS prices, companies may continue to face residual CBAM liabilities on goods entering the European market.
A rise in domestic allowance prices would increase the carbon payments made by Turkish producers, while requiring them to document those payments for potential recognition under CBAM. The relevant comparison is therefore not simply between the headline prices of the two emissions markets. Free allocation and other forms of relief must also be taken into account when calculating the effective cost borne by producers.
This will influence investment planning across energy-intensive industries. Expansions in electric-arc furnace steelmaking, the production of lower-carbon cement blends and aluminium recycling facilities require substantial capital and depend partly on expectations about future carbon costs.
A pilot with clear implementation milestones can provide investors with a framework for assessing those costs. However, uncertainty will remain until the rules governing allowance trading, surrender and payment are operating in practice.
Turkish exporters must also account for changes to EU CBAM requirements, including developments concerning downstream products and the proposed adjustment to the timetable for phasing out free allocation under the EU ETS.
The financial significance of Türkiye’s emerging carbon market for exporters will ultimately depend on the payments made under the domestic system and the conditions under which those payments can be recognised by the EU mechanism.
